Economy moving in reverse faster than predicted

WASHINGTON — The economy is moving in reverse faster than the government can measure.

The contraction for the fourth quarter of 2008 had been estimated at 3.8 percent just a month ago. Then the Commerce Department raised it to an astonishing 6.2 percent Friday — the largest revision since the government started keeping records in 1976.

That was the economy’s worst showing in a quarter-century and raised the prospect that the nation could suffer its worst year since 1946.

“Consumers are just hunkering down and saying ‘game over,’ and businesses in response are cutting back on investment and employment,” said Brian Bethune, economist at IHS Global Insight. “It’s a negative feedback loop.” Read the story.

67 Responses

A. The “Trickle Down” theory has finally reared the truth of its ugly head and proven to be a farce. People with money don’t “trickle” it down, they hoard it.

B. Executive pay and exective positions. The company I work for is not by any means a large company (approx. number of employees about 2,000) yet has a CEO, CFO, CIO, Assistant CEO. Assistant to the CEO, Assistant to the Assistant CEO. (By the last two I am not referring to administrative assisants, which they also have, but assistants that make over 250k each to “assist” them???). Senior Vice Presidents, Assistant Senior Vice presidents, Vice Presidents, Assistant Vice Presidents. Not to mention the number of Directors, Assistant Directors etc. etc. you get the idea. Again this is for a medium sized company and all of the jobs mentioned above have salaries of over 100k…up to over 1.5 million.

So how is my company doing with all of this extremely highly paid “leadership”? Not good. I do not expect to recieve a bonus this year. Possibly a raise below 2% at best. However, you can bet they will all be receiving significant additional compensation. The salaries of these useless employees, most of which spend their time hanging out at country clubs and the like(of course using their expense accounts)could be spread amongst the average worker, like me, who actually does the work. Meaning we would have more money to spend. I know the scenario above is far from rare. There needs to be an end to these cushy high paying jobs.

I have an idea about how this will play out that we can all judge within a month or two.

Under the recent economic stimulus bill most U.S. workers will see an increase in their take-home pay sometime in April as the withholding rates are decreased. I predict that the increase in their actual wages will change some minds and give naysayers an idea that Pres. Obama and this plan bring real results!

Right now we have the GOP blowhards like Rush Limbaugh doing his Chicken Little routine and predicting that the sky is falling! When people see a bit more in the pay envelope they’ll begin to think that Rush and the GOP he represents are just a bunch of ill-willed sore losers who would rather throw bricks through other peoples’ windows than help Americans through these tough times.

Even if workers see $20 more per week in the pay envelope, they’re more likely to buy their kid that toy at Wal-Mart, take the family out for a pizza dinner, or spend that money on goods and services that meet their needs. Unlike the rich who profited handsomely under the Republicans, most workers are unlikely to invest in overseas corporations or send the money to their hedge fund managers!

The Republicans spent 8 yrs advocating tax cuts for rich people and we’ve seen how well that worked out. The Democrats have passed a bill that gives tax cuts to middle class and working people. Stay tuned and we’ll see if this meets with more success than the ideas of an old, tired elephant!

Real, America’s most financially sucessful 15 years are the Reagan years and that there is a huge share of blame that belongs on all politicians, both party’s shoulders for deregulation an trying to let/forece everyone to share the American dream without fiscal responsibility of THEIR own. From Carter to Clinton to Bush, they’re all culpable. Since 1926 the markets have had a positive return 58 out of 81 years. Since 1945, the Democrats have controlled both the Senate and the Congress 22 times to 6 times for Republicans. The democrats have had TOTAL control, both houses and the Presidency 11 times to 2 times for the Republicans.
So who’s had the most effect on the finalcial crisis?

the best 15 years of the US economy were in and after the Reagan years. If you don’t think rich people spend money but just hoard it, you must not know too many rich people.

Jeanne, the Democrats have been crying chicken little/doom and gloom for the past two years of this cycle. Why are you so upset just now about someone crying chicken little? The media has played right along with it but now you expect everyone to do an abrupt about face, because of the promise of a pork laden stimulus package from politicians?

I think Jeanne has bought into the scam that the Dems. want to tax only the rich to pay for the PORKULUS spending bill and budget that the Obama team says will turn around the economy. First off Jeanne, I respectfully submit to you that right out of the box, the CBO (Congressional Budget Office) said the the stimulus bill will most likely fail in its attempt to fix the economy while spending billions on non-related earmarks that have nothing to do with job creation.Second, leading economists (who I trust more than politicians)have said that even if you tax the rich IE: $250,000 to 500,00 and take every cent they make , you wouldn’t even pay for half of this mess! And lets talk about the whopping tax cut for the middle/class. $13.00 a week! Give me a break! That’s really going to stimulate the economy. Obama said he won’t raise taxes on the middle class. That’s BS, because starting next year, he’s going to let the Bush tax cuts expire and if you are married and make 80to 100K you are going to pay an additional $1800-2000 more a year. Run the #’s do the math! So much for not taxing the middle class. One of the biggest lies out there has been that the Bush tax cuts only benefited the rich.The only way to stimulate the economy is to cut Taxes to everyone and business. History has proven this. No one out there has ever been employed by a person on welfare. Contrary to this class warfare crap, rich people in business create jobs. The Gov. simply takes your money and squanders it. And Oh, by the way, Rush Limbaugh may be a blowhard, but independent sources have confirmed his facts are 99% correct. Never let a goood LIE get in the way of the facts!

#2 & 3, didn’t you hear or witness when Obama was choosing his cabinet? The rich don’t pay taxes! not unless they get caught. How many rich people have not been caught yet? I’m sure the amount is staggaring. The 20.00 more a week in one’s paycheck is a joke, it won’t go to no toy or a meal out, it will go towards the rising costs of government fees, gas, Healthcare cost increases, etc. And all of that wonderful stimulus money the states are getting? I know that NY is going to hire engineers, It designers, etc. to beautify cites, roads, etc. Not going to do much good if we don’t get it to the working class unemployed people, the 12.00 per hour unemployed secretary, contractor, etc who can’t afford to feed their family because the food pantries are empty! Where the heck are their minds at? No wonder other countries hate us, our goverment gives the US portrayal of greed and a huge self serving image.

“You cannot legislate the poor into freedom by legislating the wealthy out
of freedom. What one person receives without working for, another person
must work for without receiving. The government cannot give to anybody
anything that the government does not first take from somebody else. When
half of the people get the idea that they do not have to work because the
other half is going to take care of them, and when the other half gets the
idea that it does no good to work because somebody else is going to get
what they work for, that my dear friend, will prove the end of any nation.
You cannot multiply wealth by dividing it.”

Why were people complaining about Bush’s spending (and rightfully so) being passed on to our children,but now are silent about Obama?I think they kept throwing huge numbers out there figuring well if we put out a trillion dollars and it gets knocked in half Ok,but no one is knocking the number down!
Already alot of people are working less to avoid going into a higher tax brackets ,it brings back alot of memories–Not good ones.Where is the incentive to work harder to achieve more in any of these bills?Too many people have this notion that people who have money or earn a good wage didn’t earn it.Obama’s tax plan taxes those who MAKE money ,not those who HAVE money,Which is why people who HAVE money approve of social spending,it doesn’t tax them.

Dear Fellow Citizens, Jakester and Paul:
Actually, the most recent best years happened under Bill Clinton’s watch and not when Ronald Reagan decided to outspend the Russians to win the Cold War. And let’s not forget that the Great Communicator actually raised taxes 6 times during his administration because he was a fiscal realist after all? That point is lost among Republicans who now genuflect before an enshrined and somewhat mythical Reagan image, and forget that facts drive presidential actions more than future fears about legacy and biography.

And Paul, I know that the upper crust can’t pay our way out of this fiscal fiasco, but its time they began pulling their weight …again! Back when Reagan became Prez they paid a lot more toward our national obligations, in keeping with their more abundant income that allowed them to reap the benefits of a wealthy nation. After all, if someone making $250,000 pays $1,000 more in taxes each year that represents 0.004 more in taxes; if someone making $50,000 has to pay $500 more in taxes that represents 0.01% more in taxes — in other words the tax hit to the working class person is two and a half more times more severe than the blow to the higher earner, even though the actual tax bill is less. Proportionality is everything in these equations!

Lastly, Paul, I applaud the expiration of the Bush tax cuts which were the most anti-democratic move that our former President foisted upon us. They were enacted as temporary and they should sunset because they were always intended to be temporary, not an entitlement for the upper classes.

After 8 years of a Republican administration that drove our economy, our international image, our self-esteem, and our nation into a huge deep hole … the citizens of this nation voted for something else. Our new elected officials are only carrying out the will of the people who elected them: isn’t that really the essence of democracy? We throw out the bums who displeased us and bring in a new set of bums who we believe can do better???

The Obama administration was elected to correct the poor judgments, the mistakes, and the paranoid overreaching of the “Dubya” administration and try something else!

Will it work? Go ask Herbert Hoover how well his strategies worked when the economic wheels began to fall off the U.S. bus during his administration. And then go ask survivors of the Great Depression if FDR made a difference in their lives and helped prevent unnecessary suffering?

As I offered before, this is a question we will all be able to answer soon … unless, of course, we’re just nursing grudges and playing the role of sore loser like Rush’s antipatriotic GOP seems to be doing.

This group of people are the ones who are going to buy homes and cars, two main ingredients that keep the economy running. Instead, poster #12 proposes to take more of this group’s money and redistribute it.

Very odd to me that when the liberals were touting their doom and gloom message for the last year and a half, it was taken as gospel. Now, when Obama is in power, the Senate and Congress already have been, we’re suppose to do a complete about face… good luck.

I don’t know when you had you last job from a homeless person or someone on welfare but they don’t control the economy or we would’ve been out of the recession last year.

Jeanne, I guess you have no faith in the misery index or other financial indicators of the times. When Reagan ended the cold war with Russia, Clinton ended up with biooions he didn’t have to spend on it, he fell into it.

Contact your president, senators and representatives. Let them know what you think. Let them know you are angry and let them know we will hold them responsible come election time. Please help me spread this message. We can’t sit by idle.

The bailouts for these financial institutions make me sick.

Particularly AIG. No one is helping the little guys out. The people that can’t afford to have million dollar bonus’s and million dollar parties. These companies are being bailed out at our expense. This sickens me. Can’t we sell off what they have and let them fail. I’ll take my chances. I think most of the voters I speak to would take their chances too. Unfortunately I have no recourse but to hold my elected officials responsible come election time. I know this is only one vote and may appear insignificant. I am hoping you will help do what is right. When I see people struggling to pay for homes and losing jobs, giving billions to these financial institutions does not sit right.

Jeanne’s thoughtful and lengthy response to me seems to have left out a few important Facts. #1, I as a repub. will be the first to admit that the Bush admin. did some relly stupid things like overspending and the Dems. think they can do the same only more.The Gov. does not create wealth! They only take from the masses and distribute it for their own means. Under the Reagan years, his tax cuts actually increased the cofers of gov. and created new jobs(WHAT A CONCEPT). The reason the deficit went UP was because their wasn’t a corresponding CUT in spending by the DEM. controlled congress. #2, lets not pretend that Obama is a centrist or a moderate. He is a hard left socialist who wants more and more control over our way of life.He is going to promise the middle class cake and in the end will deliver only crumbs. If for instance you think gov. can run health care, just look at the VA. And you can’t spend money you don’t have. Tell me Jeanne,how are we going to pay for all this spending and please spare me the notion that any large tax increase on the rich is going to square the table. I am all for equitable taxation but history has shown that overtaxation of every one cripples the economy.And while we are talking about bigger gov. lets look at Soc. Sec. and Medicare. What have they done with all that money? We need less gov. not more. In closing Jeanne, just look at the state we live in and see where the democratic party has taken us. Overspending, sky high taxes. jobs leaving the state, and deficits in the BILLIONS.

We are now in a grave situation that was handed to our current leadership by the inept, thieving cabal that controlled the government for the last eight years. It does not surprise me that as a parting gift for President Obama that they are now trying to hand him a bag of bricks as he jumps into the cesspool of muck and mire that they bequeathed him, and that he has to attempt to fix with the added weight of their partisan manipulations to thwart that effort.

Is it even remotely possible that the Right-wing will lend a bit of support in the effort to fix the damage they have caused to the economy, or will they coalesce around the Buddha like visage of Rush Limbaugh to assure they become a despised minority fringe lunatic party of dogma fixated cranks?

Iknow ,typical post ,bigs words ,ranting phrase with no substance blah blah blah..(insert George Bush),blah blah blah,a couple more big words (insert right wing or neo con )blah blah blah (insert Rush Limbaugh or Cheney),please face the facts that Obama has brought about this economic situation on himself by being anti buisiness and clueless.Think its just a coincidence this economy spiraled out of control since Obama got the nod and won the election?To do so would be totally naive,especially since alot of his backers are now admitting such.Go ahead and respond by attacking a grammatical error if you like ,as usual without pointing to any factual arguement.

You said;
“please face the facts that Obama has brought about this economic situation on himself by being anti buisiness and clueless.Think its just a coincidence this economy spiraled out of control since Obama got the nod and won the election?”

Obama has been president for less than two months. The economy spiraled out of control long before then. I lost over 50k in the stock market in 2008 (almost 50% of my equity)…please note this loss was before Obama took office.

It took twenty plus years since ( deficits don’t matter) Reagan to dig this country into such a deep hole and now all the ADD-addled blogmeisters here want to Obama to fix everything overnight.

Instant gratification ( In all shapes and sizes) is what spun this country out of control and will delay the straightening out of this mess. Unfortunately, many here have neither the patience for the process nor the understanding of the huge task that lays ahead.

Chris, more importantly, the Democrats had the majority and with the help of the media, have been fear mongering about the economy for a year and a half helping to push it lower. Now they want an abrutp about face, good luck.

mmcdonald – People who have some working knowledge of the use of language, generally are far better read, informed and in many cases have spent the better portion of their lives studying the system, its history, its fluctuations and manifestations before formulating their personal reflections of that digested and absorbed body of knowledge. We are then flung into the wonderful world where even the most inarticulate oaf, who gained his personal philosophy by reading it, or having it read to him, off the pack panel of a pre-sweetened and already digested box of Limbaugh-Pops cereal. Have you ever wondered that perhaps the side you support might be wrong? I wonder that about my side of the argument all the time, not because I fear it is flawed, but that it might become so without due diligence. You could learn a lot by opening your mind a bit more. You could find that the world is a much larger place than you have imagined.

Greed has driven us to this point. Fear will bring us to the bottom. Confidence in each other and trust will start the recovery and fuel economic progress. The faster we get to the bottom and end the grieving, the misery, and the utter feeling of hopelessness, the faster we can begin a more normal and positive economic upswing, where prices will be more in line with peoples earnings. Tell Washington with a louder voice we the people are sick of the abuse to us! Your doing it with your wallets now, do it with your voice and your pen as well.

The economic revolution is upon us, watch history being made before your own eyes. Watch government attempt to control the kayos, watch business attempt to beg for our dollars by reducing their ridiculous profits for substandard products, and lye to us telling us they are being fair. Watch banks that came up with ridiculous schemes to steal money from us by baiting and switching interest rates on loans fail one by one. We are smarter now and our wallets are telling us and them who the real boss is.

It seems to me the greed of oil companies and banks have a great deal to do with this economical tragedy; and government allowed it to happen, as those at the top took major profits from this mess (Mr Chaney The previous VICE PRESIDENT of the UNITED STATES comes to mind as one of the most greedy). Leaders in government are crooked and steal from all of us. They make great salaries, have health care, and retirement plans etc etc, while you make poor wages and can’t go to the doctor because you can’t afford to. They have kept several of us down to date but I have a feeling that’s all coming to change. This is proven as numerous leaders are being taken to court on their dirty dealings (Bruno, etc.). Greedy businesspeople are in it for themselves and this must change. Laws must be agreed on by honest men and women so business and government can not take advantage of their employees or consumers again. We the people must be the lobbyists, not big business. You should not have to be a millionaire to be the President of the United States.

It appears to me that some American automobile manufactures are going to go “out of business”, the question is; how many, whose first, and when will it happen. This will be an economic mess but it will level, and the consumers will benefit from this. We the people control this economy and business and government are loosing their power, and they don’t like that. We the people are in fact the driving force, use your power wisely.

I do not feel sorry for greedy auto manufactures, I do feel for the employees of these companies, and the consumers that purchased their products, but we will adjust, as we always have. For years and years American automobile manufactures have overinflated the prices of the price of their products ($40,000 plus for a pick up truck) and made outstanding profits, just because they could demand such. They made top dollar; now they beg for the taxpayers assistance. To hell with them, let those CEO’s and management liquidate their personal assets first, all of them, loose their homes and have them live with their relatives when they have nothing left as so many of us are facing. They have done this to themselves. They won’t, they took care of themselves, and the rest of us can “eat cake”.
The bottom will come, as it always does, and the American people are equalizing the economy now. Now is not a time for sadness, it is a time for celebration. We the people are finally forcing business to stop it’s greedy ways and stop taking so much from us for so little or inferior product(s). I’m tired of buying things that just don’t work. Automobiles that need constant service due to poor design or engineering specifications that are substandard while top dollar is being charged for such. Notice how business begs for our dollars now, both on the street and from the government. How come GM, Ford, and Chrysler can reduce the price of a truck from 40K to 25K now? Because it was never worth 40K before, they are greedy and they can now deal with their greed and misery alone, as were not buying. How long it lasts depends on the stubbornness of all concerned, the consumers, the government, the businesses, the investors, the banks etc. What is nice to see is that the rich are growing richer at a slower rate unfortunately the poor are growing poorer at a faster rate. It will become more equal soon and when it does the change in the economy will start to become positive. Small business will thrive again and people will do business as they did before, with a handshake via the pay or barter system. We will keep greedy government out of our business and force them to do business the peoples way, once again.

Despite what government and business tell American consumers, we are in the drivers seat again, and we will control the economy, drive the economy and put government and business in it’s rightful place once again; working for us and knowing it! We are a major player in the world economy and when the US has economic trouble, they all have trouble. That’s good news.

Good day and remain hopeful for this will change, In the end the consumer will be the better for it. VOTE and be good to each other for it is truly all we really have.

I have noticed that iknowthetruthismine is a very eloquent writer and articulates his/her message very well. However, as most of their ilk do, they have very few (if any) facts to support their side of the argument. I will give you the point that some republicans played the part in our economic demise but like most left leaning Dems. they want to give their side a FREE ride. Frankly, as research will bear witness the likes of Barney Frank(dem.), Franklin Raines (clinton appointee) Chris Dodd (CT. dem) Maxine Waters (Congress /dem/ CA) and a host of other Dems. on the Banking Committee were all part of the catalyst that caused this economic meltdown with the Sub-Prime fiasco. They were the ones that told everyone back in 2002 that Fannie Mae & Freddie Mac were fiscally sound and were of no risk in covering the mortages that they bought from the banks knowing full well that the regulatory process allowed for the financing of said mortgages from people who should never have been given them in the first place. The dems. under Carter & Clinton forced banks to lend to these people even when they could not afford it. In closing iknow thetruth is mine should practice what they preacH and get ALL THE FACTS before engaging in any type of intelligent debate. NEVER LET THE FACTS GET IN WAY OF A GOOD LIE!

jakester #22, yes the Dems had the majority but Bushbag had the veto power. Hopefully things will change now that Bushbag is gone.

He, as the leader of the country, had the responsibility to keep the U.S. on track. Did he do so? Have you looked at your 401k value recently. Have you seen the unemployment numbers recently? Have you seen the forclosure numbers recently. Has Osama Bin Laden been found? Did Iraq have weapons of mass destruction?

Paul – It is the Reagan begun mantra of the value of an unregulated free market that has led to the present situation. That the Democrats wanted to open up the dream of home ownership to a wider segment of our population was a noble idea that was usurped by an under-regulated banking industry that decided to stretch the game to the limits to see how much they could squeeze out of a market they pumped up by creating artificial wealth in the housing market. They manipulated the market, converted a portion of the artificial wealth to actual wealth they then sucked out of the market by selling off the worthless paper, sticking the unfortunate home buyer with the valueless portion of the equation, their equity and balance owed, which is still considered as valid paper to be paid or foreclosed on. The part of the equation that caused the problems occurred during the last eight years under the rapine tutorage of the most corrupt regime to seize the White House. Lastly, I find that having an honest debate with people so corrupted by their support for the thieving Bush regime to be a totally oxymoronic experience, like debating morality with a child molesting priest.

Same ole Bush bashing talking points… what’s new? Bush, one man,
has been responsible for everyting, what a quaint idea. He’ll go down in history as being President in some of the most trying times in History. All while trying to keep America safe on his watch and deal with the most ruthless, greedy, unethical body of partisan politicians and their appointees ever. Throw that in with a partisan agenda driven meida and a half brain dead public and you’re the winner….

Why don’t we look at what got us out of the last recession and do more of that? I doubt it was raising taxes, expanding government and spending trillions in pork.

#27 In response to your rebuttal of my text and contrary to your belief the capitalism and free enterprise are the evil in our society, you can’t dispute the fact that Reagan’s tax cuts spurred the economy and fueled a huge surgence of job growth. Unfortunately, the Dem . controlled Congress just kept overspending and created the deficits that we witnessed.Economists will verify my facts and frankly I belive them more than any politician.The greed in big business is something that may never dissappear and I do find it offense. However if you think that government can run the economy or create wealth by redistribution at taxpayers expense then any further debate is futile and redundant.I would rather give my money to a CEO than to a politician. At least they EARNED IT!